Why Turkey's currency is plunging and what it means

Adjust Comment Print

The country's economy was already in trouble, but the lira's selloff was heavily compounded by Donald Trump's announcement that he was doubling tariffs on Turkish steel and aluminum.

President Recep Tayyip Erdogan vowed on Saturday to defy U.S. "threats" over a detained pastor, showing no signs of concessions in a bitter row that has caused the Turkish lira to crash.

The United States placed sanctions on two Turkish officials earlier this month because of Brunson's case.

Earlier this week USA and Turkish officials met in Washington to discuss issues that have pitted the two North Atlantic Treaty Organisation allies against each other. Turkey has mostly done that to itself - until, that is, Trump started tweeting.

Erdogan Friday held telephone talks with Russian President Vladimir Putin, discussing economic and trade issues as well as the Syria crisis.

Erdogan reportedly was defiant, telling worshipers after Friday prayers that Turkey "will not lose the economic war". He urged Turkish citizens to immediately exchange their gold and dollars for lira. "It is a national fight", he told a crowd in the northeastern city of Bayburt.

U.S. general slams leader of Iran's Quds Force
But that has proved hard : European companies have quit Iran, arguing that they can not risk their USA business. He said he considered the US pullout from the nuclear deal and re-imposition of sanctions to be "incorrect".

He is facing up to 35 years in prison if found guilty of supporting the unsuccessful coup to overthrow President Recep Tayyip Erdogan in 2016.

Turkish lira fell to an all-time low against the dollar yesterday, making it worth about 16 cents. While many of Turkey's challenges are specific to that country, there are certain characteristics - a heavy debt load following a prolonged, low U.S. interest-rate driven borrowing binge in dollars - broadly shared throughout emerging markets.

Treasury and Finance Minister Berat Albayrak - who is Erdogan's son-in-law - was scheduled later on Friday to outline a 'new economic model'. "We are knowledgeable with justice and law", Erdogan said in his address in the Black Sea province of Ordu.

Concerns mounted Friday after a report in the Financial Times that the supervisory wing of the European Central Bank had over the last weeks begun to look more closely at eurozone lenders' exposure to Turkey.

Erdogan has cast the recent slide in the lira as a war and without naming countries said supporters of a failed military coup two years ago, which Ankara says was organized by a USA -based Muslim cleric, were attacking Turkey in new ways since his re-election two months ago.

Brunson denies the charge and his cause resonates with Christian conservative supporters of Trump, who could also be influential as Republicans seek to retain control of Congress in midterm elections in November. On Thursday Ergodan said Turkey will withstand the economic pressure. The lack of central-bank action to support the currency is also spooking investors and Erdogan's previous comment that interest rates are the "mother and father of all evil" hasn't helped.

Tottenham boss Pochettino happy to keep Alderweireld
If all the players today are thinking about a collective target, we can be competitive. "That is the key this season". Spurs failed to sign Jack Grealish on Deadline Day as Aston Villa stood firm on their refusal to sell at any price .

"This could be the most expensive pastor in world history", Sekulow said, referring to the harm being done to Turkey's economy.

The new duties on Turkey are double the level Mr Trump imposed in March on steel and aluminium imports from a range of countries.

UBS chief economist for EMEA emerging markets Gyorgy Kovacs said a giant rate hike of 350-400 basis points would be "consistent with real rate levels that in the past helped to stabilise the currency" but warned a deal to normalise ties with the U.S. may also be needed.

"In that sense, the Turkey situation can be a contagion not only in Europe but across emerging markets", Anderson said.

He appeared to blame foreigners for trying to hurt Turkey, saying: "This will be my people's response against those waging an economic war against us". Hard currency debt issued by Turkish banks suffered similar falls.

Cowboy Ninja Viking is indefinitely delayed for unknown reasons
Moreover, the speculations of PC walking out of Bharat' for this Hollywood project have been quite rife. Guymon Casady, Ben Forkner and Mark Gordon are producing this unique take on the comic book genre.